The Mombasa tea auction recorded a marginal rise in price as volumes of the beverage on sale declined
A kilogramme of tea fetched on average Sh209 which was a 4.5 per cent rise on previous trading at the weekly auction. The volumes offered for sale dropped from 5.9 million kilogrammes in the previous sale to 5.4 million kilos in last week’s sale.
“The week’s average price increased to Sh209 when compared to last week’s auction where it fetched Sh203,” said Edward Mudibo, managing director of the East African Tea Traders Association. Mr Mudibo said that out of 147,839 packages (9,680,000 kilos) available for sale, 133,585 were sold with 9.64 per cent going unsold. The price of the commodity has been falling in the previous auctions and nearly hit a low that was witnessed in 2014.
Kenya Tea Development Agency managing director Lerionka Tiampati says the price of tea has been affected by the glut that resulted from EL-Nino rains that started late last year. “The falling of prices as witnessed in the recent auctions is a normal phenomenon at the moment because there have been a lot of tea at the auction resulting from the EL-Nino rains,” said Mr Tiampati. He added that price is a factor of demand and hence enhanced volumes from factories fetches lower prices due to increased supply
KTDA runs 66 factories that are supplied by nearly 600,000 small-scale-tea farmers across the country. Expectations of initial tea payments, commonly referred to as mini-bonus, between April and May are high to be followed by the main bonus later in the year. Last year it paid Sh14.5 billion in mini-bonus.
Kenya is in the quest to open up new markets and expand the existing ones such as China, which has potential to buy more of the local beverage as a way of shielding farmers from low earnings.
Kenya’s tea exports to Pakistan — the country’s leading market for the beverage — grew by 10 per cent in 2015, controlling more than a quarter of the total commodity that traded at the Mombasa auction. Data from the Tea Directorate indicates that Pakistan purchased 116 million kilogrammes of tea in 2015 compared to 105 million in the previous year. The second major buyer Egypt registered a significant drop in purchases with the volumes bought dipping 24 per cent to 77 million kilogrammes last year compared to 101 million kilos in the previous year